America

The Supreme Court has agreed to decide an important question involving the federal pension and health care law known as ERISA. The Court will decide whether, under ERISA, insurers can seize the assets of disabled and injured individuals who received disability benefits or personal injury settlements but spent those monies on everyday living expenses.

The United States Supreme Court agreed to hear Montanile v. Board of Trustees of the National Elevator Industry Health Benefit Plan (No. 14-723), a case involving a $1 billion multi-employer plan that provides health insurance to nearly 100,000 individuals. The Court will decide whether federally regulated insurers can seize the assets of disabled and injured individuals who received disability benefits or personal injury settlements but spent those monies on everyday living expenses.

FACTS OF THE CASE

Robert Montanile was in a car accident that resulted in severe spinal injuries. He received medical treatment which was paid for by his health plan. Montanile sued the drunk driver who caused the accident and recovered $500,000.

Unfortunately, that amount was insufficient to cover Montanile’s medical bills, lost earnings, pain and suffering, and legal fees resulting from the accident. Although much of his recovery was the result of damages other than medical expenses, Montanile’s health plan demanded that he personally reimburse it for the medical bills it had covered (and for which Montanile had already paid premiums). At issue is whether, under the federal law known as ERISA, Montanile must repay the plan even though he already spent the settlement proceeds on living expenses including the care of his young daughter.

STATEMENTS FROM BOTH SIDES

The case will be argued by two of the nation’s most influential Supreme Court lawyers, Peter K. Stris and Neal Katyal, both of whom were recently named by Reuters as among the sixty-six most influential lawyers in the country.

The successful petition was filed by Peter K. Stris of Stris & Maher LLP in Los Angeles. Stris routinely appears before the Court, and has been involved in more than half of its ERISA cases over the past decade. “In one respect,” said Stris, “this is an easy case. The Court has said that the issue is to be decided based on a particular set of historical rules. And applying those rules, the answer is clear: the insurer loses. The real question is whether the Court will remain faithful to the legal principles it has espoused.”

Neal Katyal of Hogan Lovells US LLP will argue the case for the Plan. Katyal is the former Acting Solicitor General of the United States and has argued 24 cases before the Court. According to papers filed by Katyal, “both plans and beneficiaries desperately need clarification as to whether a beneficiary can evade enforcement of a plan’s reimbursement provision by reneging on his promise . . . .” “A decline in reimbursement affects more than the individual beneficiaries involved in a particular case; it impacts all plan beneficiaries.”

This is not the first time Stris and Katyal have crossed swords. In US Airways, Inc. v. McCutchen (No. 11-1285), an ERISA case decided by the Supreme Court in 2013, Stris also represented an injured beneficiary and Katyal the health plan.

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